Crunching Data Across the South
Data centers don't create many jobs, but state and local governments covet the investment dollars they bring.
Southern Tech Sites 2009
Google is pretty picky, too, given how critical speed and reliability are for ongoing success when you're in the Internet business. The cyber giant needs lots of data crunching power, so it builds data centers all over the world, including several across the South. Google tends to be secretive about its data center operations, announcing some publicly but keeping many of them relatively under wraps. The company is upfront about its multimillion-dollar center in Lenoir, North Carolina, and a couple of years ago announced development of a center in Berkeley County, South Carolina. Independent followers list several others with southern addresses, including Georgia, Virginia, Texas, Florida, and Oklahoma.
The bottom line is that data centers have blossomed in the South for the same kinds of reasons they have sprouted elsewhere, says Pitt Turner, president and managing principal of Uptime Institute Professional Services, which consults with data center designers and engineers. Developers may be looking for cheap power, access to great Internet connections, and proximity to customers so as to maximize data delivery speeds. They may also simply want to be close to home. "One of the hot spots is always close to the corporate headquarters," he says. "Often the clients want to put their data center within quick access."
That desire for proximity would explain why northern Virginia developed into a major data center hub in the 1990s - it was the place where Internet giant America Online reached maturity, spawning nearby data center operations and attracting likeminded operations. "Everything clustered around northern Virginia, starting with AOL, and it went from there," says Hamilton Southworth, a corporate managing director for the commercial real estate services firm Studley Inc.
There are data centers in virtually all southern states, with especially strong concentrations in Texas, Florida, Georgia, North Carolina and Virginia. For the most part, the data center map in the South confirms a somewhat offbeat truth that Southworth cites about data center development: Many of the most successful clusters sprout in or near cities that have professional football franchises. Strange but true: Florida, Georgia, North Carolina, Tennessee, Texas are all places to find NFL tailgating on Sundays and healthy data center development during the week.
There are exceptions to every rule, of course. You've got football in New Orleans, Louisiana, but the Big Easy is not as popular when it comes to data center development for yet another common reason influencing data center site selection: steering clear of the risk of natural disaster. For example, Data Protection Services impressed many in the business when it kept its New Orleans operations up and running as Hurricane Katrina blasted through and left much of the city underwater, but the company has since picked up and moved farther inland.
"People may prefer a location farther in from the coast, to reflect the fact that in Gulf Coast states there is hurricane exposure," says Turner. That's tough luck for a place like New Orleans, and to some extent Houston, Texas, but it's a positive for such locations as Dallas-Fort Worth, Texas, which, according to Turner is appealing because it's "a major airport hub and is perceived to be inland far enough to eliminate some of the risk."
Factors Influencing Site Decisions
For a data center, Turner says, the two most important interactions would be with network presence and power. Because data centers put hundreds or thousands of computer servers under one roof and run the heck out of them, they tend to use a lot of power. They're drawing large quantities of electricity not only to feed the servers, but also to keep them cool. And to be sure their power never quits, data centers need redundant power supplies, often including onsite backup generation capability. "The amount of power consumed over a number of years will cost more than the center itself," says Turner. "Because of the amount of power consumed, the rate for that power becomes one of the largest economic differentiators."
Data centers also need outstanding links to the Internet, with diverse fiber networks nearby to ensure that there are no problems with latency, which refers to the time it takes for data to get from origin to destination. "Latency issues can be very significant," says Southworth. "A microsecond may be a big problem."
Avoiding risk is highly important, too. Hurricanes, tornadoes, and earthquakes are obvious concerns, but so are manmade perils. "They want to be more than a mile from an interstate commerce path," says Turner, noting that highways and rail right-of-ways haul all kinds of hazardous chemicals. Think about news reports involving toxic spills - they often talk about evacuation of the surrounding area, and that area, according to Turner, is often a mile radius. No wonder data center developers want to put at least a mile between data centers and highways.
Climate also plays a role in site selection. "One of the things that goes against the Southeast is that it's hot and humid," says Southworth. "That necessitates a lot more money going into cooling, so operating costs may be higher." But he points out that a look at the map shows that plenty of data center developers apparently can stand the heat.
What Makes a Data Center
Southworth describes three distinct types of data center developments: the large centers from Google, Apple and other big names that serve massive audiences; smaller centers that companies set up onsite at headquarters or another major facility; and centers established by third-party operators that he says aggregate the demand from small users and build large data centers.
According to Turner, those developing data centers follow local building codes because they have to, but they're really paying greater notice to a different set of rules. "Building codes really are life safety codes and have nothing to do with the economic viability of the site," he says. In other words, codes are all about helping the people inside the buildings survive a catastrophe. Saving people is important to data center developers, of course, but so is safeguarding the equipment and the data it stores, and that means following protocols that are a lot more stringent than what local codes require. "With a data center it's common to see the site built to stricter standards."
For the most part, Turner says, a data center is likely to be built in a new structure rather than an existing building, and it's not likely to be more than a story or two tall. "Clients that have a larger data center requirement typically will go to a new site for a number of reasons," he says. "The data center is really a form-follows-function type of facility. It's really driven around the computer room, and then you wrap a building around that. It's awkward to fit into an existing building."
Across the South and elsewhere, data center development is going strong, even in difficult economic times. "The data center business is as hot as it was during the dot-com buildup - hopefully we won't see any bubbles bursting," says Turner. "More and more companies are in a position where they need to augment or supplement, or take a giant step forward, in their IT capabilities."
It's hot, says Southworth, even though a typical data center doesn't employ all that many people, at least not compared with a big factory. "It's not a job-intensive industry, but there are jobs. They will be mostly in excess of the average income in a given area." What's more, he says, they generate a fair amount of taxes: "When you have a fully built-out data center, you could easily put in computer equipment and servers worth $100 million. That's going to be personal property and subject to local taxes."
Data centers are also in demand because they don't drastically change a location's qualities. A data center adds a lot more to the tax base than a warehouse with the same square footage would, but because of the comparatively small work force, it doesn't put much strain on city services. "That increase in the property tax base comes with very few demands," says Southworth. "Parks, schools, traffic will all have very minimal impact."
Hoover Treated Wood Products Plans Fairfield, Texas, Wood Treating Facility
EnerVenue Establishes Shelby County, Kentucky, Manufacturing Complex
LG Energy Solution Plans Queen Creek, Arizona, EV Battery Manufacturing Plant
Middle West Spirits Expands Columbus, Ohio, Operations
Textile Manufacture 23 Farrar Street Relocates-Plans Lynn, Massachusetts, Operations
Canada-Based Epsilon Industries Plans Tuscaloosa, Alabama, Prefabricated Modular Utility Systems Plant
37th Annual Corporate Survey: Economic Pressures Exerting Greatest Effect on Decision-Makers
19th Annual Consultants Survey: Clients Challenged by Tight Labor Market, Energy Availability
The Top Investment Location Prospects for Aerospace Manufacturing
2022 Top States for Doing Business Provide an Environment for Business Growth
Companies Are Recalibrating Their Priorities
How Are Economic Developers Partnering to Solve Workforce Challenges?
Strategies to Overcome Intensifying Industrial Real Estate Challenges